2022 saw a number of successful collective sales, with owners of some private residential enbloc developments willing to accept an offer below the reserve price, for example Golden Mile Complex on Beach Road, where its owners accepted a $700 million bid which is 12.5% below the $800 million reserve price from a consortium made up of Perennial Holdings, Far East Organization and Sino Land.
In July, owners of Chuan Park condo at Lorong Chuan also agreed to reduce their reserve price to $890 million at 5.11% lower than the guide price of $938 million to sell to Kingsford Development and MCC Land during the private treaty period, after the tender closed in April.
This year 2022 may see collective sale quantum of close to S$4 billion nearly doubling last year's S$2.2 billion from the 11 collective sale deals for the whole of 2021.
Real estate professional Kiwi Lim believe owners of ageing, 99 years leasehold commercial and / or private residential properties are generally more motivated to sell and are willing to consider reducing their reserve price for their collective sale attempts when compared to owners of prime, freehold private residential developments as seen in both enbloc sales of Chuan Park condo and Golden Mile Complex."
"I think the collective sale market will remain healthy in 2023 possibly matching this year's collective sale quantum as private property owners look to cash out from their ageing leasehold private residential developments in a seller's market, especially those private apartment status developments in smaller land parcels. However, developers are also mindful of possible headwinds from economic recessionary pressures in Europe and America after 2023. said Kiwi Lim
In July, owners of Chuan Park condo at Lorong Chuan also agreed to reduce their reserve price to $890 million at 5.11% lower than the guide price of $938 million to sell to Kingsford Development and MCC Land during the private treaty period, after the tender closed in April.
This year 2022 may see collective sale quantum of close to S$4 billion nearly doubling last year's S$2.2 billion from the 11 collective sale deals for the whole of 2021.
Real estate professional Kiwi Lim believe owners of ageing, 99 years leasehold commercial and / or private residential properties are generally more motivated to sell and are willing to consider reducing their reserve price for their collective sale attempts when compared to owners of prime, freehold private residential developments as seen in both enbloc sales of Chuan Park condo and Golden Mile Complex."
"I think the collective sale market will remain healthy in 2023 possibly matching this year's collective sale quantum as private property owners look to cash out from their ageing leasehold private residential developments in a seller's market, especially those private apartment status developments in smaller land parcels. However, developers are also mindful of possible headwinds from economic recessionary pressures in Europe and America after 2023. said Kiwi Lim
What should investors be mindful of?
Investors looking to buy a private residential / commercial property with enbloc potential hoping to make a windfall must remember two critical points:
1. It is difficult to predict exactly which private development will successfully enbloc and calculate how much they can profit from it. This is because for a collective sale attempt to take shape, 80% or more of the owners must agree to the collective sale with many other conditions and regulations to process. Some smaller developments may find difficulty in getting 80% of the owners to agree to the enbloc attempt simply because it may take only a handful of owners who love their homes so much that they are reluctant or unwilling to sell therefore killing off the collective sale dream of their neighbors.
If the development does not enbloc, the investor will be left holding onto an ageing private property in need of high maintenance costs with a severe lease decay if its a leasehold development. This may be a nightmare for investors.
2. It is also difficult to time the enbloc sale and predict when exactly it would occur for a private development because if the enbloc happened within the time frame for the Seller’s Stamp Duty (SSD) period, then it may seriously reduce the amount of profit the investor can take away from the collective sale.
The seller's stamp duty (SSD) was revised on 11 Mar 2017 to impose a sales tax of between 4% to a hefty 12% on the sale price payable to IRAS. The seller's stamp duty (SSD) tax payment usually have to be made to IRAS before the seller can collect the enbloc money from the developer.
Investors looking to buy a private residential / commercial property with enbloc potential hoping to make a windfall must remember two critical points:
1. It is difficult to predict exactly which private development will successfully enbloc and calculate how much they can profit from it. This is because for a collective sale attempt to take shape, 80% or more of the owners must agree to the collective sale with many other conditions and regulations to process. Some smaller developments may find difficulty in getting 80% of the owners to agree to the enbloc attempt simply because it may take only a handful of owners who love their homes so much that they are reluctant or unwilling to sell therefore killing off the collective sale dream of their neighbors.
If the development does not enbloc, the investor will be left holding onto an ageing private property in need of high maintenance costs with a severe lease decay if its a leasehold development. This may be a nightmare for investors.
2. It is also difficult to time the enbloc sale and predict when exactly it would occur for a private development because if the enbloc happened within the time frame for the Seller’s Stamp Duty (SSD) period, then it may seriously reduce the amount of profit the investor can take away from the collective sale.
The seller's stamp duty (SSD) was revised on 11 Mar 2017 to impose a sales tax of between 4% to a hefty 12% on the sale price payable to IRAS. The seller's stamp duty (SSD) tax payment usually have to be made to IRAS before the seller can collect the enbloc money from the developer.
In April this year, I wrote an article expressing my confidence that Chuan Park will successfully enbloc
The Enbloc Of Chuan Park
"In April this year, I wrote an article expressing my confidence that Chuan Park condo will successfully enbloc and received feedback from many that they do not think developers will be interested due to various reasons." said Kiwi Lim from one of the top real estate agencies - Huttons Asia. Click the above image to read the article on Chuan Park condo in April.
Towards the end of July, a joint venture of two Chinese developers Kingsford Development and MCC Land successfully secured Chuan Park condo in District 19 for $890 million in the collective sale attempt. Chuan Park condo has 444 condominium units and two commercial units sitting on a sprawling land area of 400,588 sq ft with a plot ratio of 2.1. Based on the closing price of $890 million, the land rate works out to $1,256 psf per plot ratio after taking into consideration the differential premium of $192.62 million to top up the lease to a fresh 99-years.
Even though majority of the owners agreed to sell, but they are also sad to leave Chuan Park condo as its located in a serene quiet matured private and landed residential estate enjoying the ultimate convenience of having the Lorong Chuan MRT station on the Circle Line right at its doorstep and the bustling Nex Shopping Mall within a short walking distance.
Chuan Park condo is also within close proximity to top schools such as CHIJ Our Lady of Good Counsel, Maris Stella High School and Raffles Girls’ School (Secondary). Chuan Park condo was rapidly ageing and in need of high maintenance and quite a few of its units has water seepage issues affecting the quality of the residents' daily lives.
Investors who bought Chuan Park condo for its enbloc potential in 2019 paid an average of $980 psf for a condo unit there and may have successfully avoided the seller's stamp duty. Those investors who bought within three years of this enbloc sale may see themselves being slapped with a sellers stamp duty from IRAS of between 4% to 12% tax on their respective unit's enboc sale price.
"In April this year, I wrote an article expressing my confidence that Chuan Park condo will successfully enbloc and received feedback from many that they do not think developers will be interested due to various reasons." said Kiwi Lim from one of the top real estate agencies - Huttons Asia. Click the above image to read the article on Chuan Park condo in April.
Towards the end of July, a joint venture of two Chinese developers Kingsford Development and MCC Land successfully secured Chuan Park condo in District 19 for $890 million in the collective sale attempt. Chuan Park condo has 444 condominium units and two commercial units sitting on a sprawling land area of 400,588 sq ft with a plot ratio of 2.1. Based on the closing price of $890 million, the land rate works out to $1,256 psf per plot ratio after taking into consideration the differential premium of $192.62 million to top up the lease to a fresh 99-years.
Even though majority of the owners agreed to sell, but they are also sad to leave Chuan Park condo as its located in a serene quiet matured private and landed residential estate enjoying the ultimate convenience of having the Lorong Chuan MRT station on the Circle Line right at its doorstep and the bustling Nex Shopping Mall within a short walking distance.
Chuan Park condo is also within close proximity to top schools such as CHIJ Our Lady of Good Counsel, Maris Stella High School and Raffles Girls’ School (Secondary). Chuan Park condo was rapidly ageing and in need of high maintenance and quite a few of its units has water seepage issues affecting the quality of the residents' daily lives.
Investors who bought Chuan Park condo for its enbloc potential in 2019 paid an average of $980 psf for a condo unit there and may have successfully avoided the seller's stamp duty. Those investors who bought within three years of this enbloc sale may see themselves being slapped with a sellers stamp duty from IRAS of between 4% to 12% tax on their respective unit's enboc sale price.
RSS Feed
